The latest Labor Department estimates indicate that just over 1.8 million hourly workers were paid at or below the federal minimum last year. While that's a small part of the overall workforce -- a mere 2.3 percent of hourly workers -- it makes up a larger portion in some states.
More than 50,000 workers, for instance, earned the federal minimum wage or less in Kentucky, accounting for an average of 4.6 percent of all hourly employees over the past two years -- more than any other state. The most recent estimates also suggest such low-wage earners made up more than 4 percent of hourly employees in Mississippi and Tennessee.
These workers have seen their purchasing power decline significantly as inflation has risen 16 percent since the last federal increase.
Meanwhile, in four states -- all with higher state minimum wages -- less than 1 percent of hourly workers earned at or below the federal minimum last year. California’s estimated share was the nation’s lowest, followed by Montana and Washington. (Full-time students, tipped employees and a few other types of workers are exempt from the federal minimum wage, so all states report at least some workers earning less than $7.25 an hour.)
SOURCE: U.S. Bureau of Labor Statistics. See note for more information.
A total of 29 states set the minimum wage above the federal rate. This year, 18 states raised their minimum wage higher either through new laws or existing formulas tied to inflation, according to the National Conference of State Legislatures.
Washington state’s minimum wage of $11.50 is currently the nation’s highest, followed by the District of Columbia, California and Massachusetts. Lawmakers in other states, including Connecticut and Vermont, are currently debating proposals to implement additional wage hikes.
A small but growing number of cities have implemented local minimum-wage ordinances in an attempt to offset higher costs of living, although localities are prohibited from doing so in states with laws blocking local control. Activists in Alabama and Colorado are calling for preemption laws in those states to be repealed.
Along with differences in state wage laws and costs of living, the major industries supporting jobs in each state further explain why low-wage workers are more common in some states than others. According to the 2017 federal estimates, service industry occupations account for about two-thirds of all workers earning the minimum wage or less. These are mostly tipped employees at restaurants.
In many places, tipped workers haven’t benefitted from state minimum-wage laws as much as non-tipped workers have. Nebraska and New Jersey, for example, enacted laws raising the general minimum wage while keeping the federal minimum of $2.13 in place for tipped workers.
Over the long term, the size of the minimum-wage workforce has contracted in every state. Some states, though, experienced a much more noticeable decline than others.
When two-year estimated annual averages for 2016-2017 are compared with those for 2010-2011, West Virginia, Georgia and Texas recorded the largest percentage point decreases in the share of hourly employees earning at or below the minimum wage.
All three states had relatively high levels of minimum-wage workers to begin with. But two other states similarly reporting high numbers of workers earning the federal minimum back in 2010 -- Idaho and Kentucky -- haven’t experienced nearly the same decline.
